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Want to save business money? Know the bank charges for foreign outward remittance

Thinking about saving some cash? 

Before you dive into sending money abroad, you need to know about all bank charges for foreign outward remittances. Knowing the ropes can help you keep more money in your pocket. 

There are a couple of different service charges levied by every bank on each business foreign outward remittance. 

Read on to find out more …

#1 Bank charges for foreign outward remittance FEMA

FEMA, or the Foreign Exchange Management Act, is like a set of rules in India that helps make international trade and money transactions smoother. It also keeps the country's money system stable. One important part of FEMA guidelines is controlling the sending of money outside India. This includes different transactions, like paying for business, investing, or sending money for personal reasons. So, FEMA ensures that when people or businesses send money abroad, they follow certain rules to keep everything in order and make sure the country's money stays stable.

It generally does not specify the bank charges for foreign outward remittances that banks or financial institutions may impose for foreign outward remittances.

The determination of bank charges is typically left to the discretion of individual banks and authorized dealers. Banks set their fee structures, and these charges may vary between institutions.

#2 Bank Charges on 15 CA/CB   

The company, with the help of a chartered accountant, can prepare 15 CA, and 15 CB forms. 15 CA is mandatory for all transactions while 15 CB is mandatory for all transactions above INR 5 L. In the corporate outward remittance process, 15 CB is mandatory for all transactions. The 15 CA/CB apart from being submitted to the bank can also be submitted online via the IT website. It contains details about from which bank the money is being transferred from.  

Bank charges for foreign outward remittance for 15CA/CB form are not applicable as such a service is not provided by the banks. This is a service provided by chartered accountants that companies need to consult through external sources or have an in-house CA for the same. 

However, fintechs like Karbon go the extra mile by providing a specialized service through their in-house Chartered Accountant (CA), who efficiently handles 15CA/CB services if and when needed by the company, without imposing any additional fees.

#3 Miscellaneous Bank charges 

There are no limitations on how often you can send money overseas. In the fiscal year 2020-21, the cap is set at US$250,000 (INR 2.04 lakh) per individual, covering both personal and non-personal remittances.

#4 Taxes under bank charges for foreign outward remittance

All banks are required to levy a standard GST fee of 18% of the transaction value of all outward remittances. This is a standard fee and cannot be altered by individual banks. 

#5 Documentation 

Companies are required to submit the following documents:- 

  1.  Permanent Account Number (PAN), 
  2. Identity, and address proofs, 
  3. Form A2 
  4. Form 15CA. 
  5. Form 15CB
  6. Form 10 F
  7. Tax residency certificate
  8. NoPE form 

#6 Time Frame

With Karbon Forex, the time taken for an outward remittance is 1-2 business days. 

With other Indian banks, it may take anywhere between 3-5 business days. 

Bank charges for foreign outward remittance

Bank Name 15 CA/CB Charges SWIFT Charges Bank NOSTRO Commission Forex Markup Rate (Per USD) GST
Karbon Rs 2000 Rs 500 - 750 0.15% for A1
0.25% for A2
1p - Re 1 18%
SBI No CA service Rs 750 0.25% for A1
0.5% for A2
Re 1 - Rs 1.5 18%
HDFC No CA service Rs 600 0.25% for A1
0.5% for A2
Re 1.5 - Rs 2 18%
ICICI No CA service Rs 550 0.25% for A1
0.5% for A2
Re 1 - Rs 1.5 18%

FAQs on bank charges for foreign outward remittance

Are foreign outward remittances tax-free?

Tax Collected at Source (TCS):

In India, TCS is applicable on outward remittances for foreign travel or education expenses above a specified threshold. Suppose an individual is remitting funds for their child's education abroad, and the amount exceeds the threshold set by the Indian tax authorities. In this case, the person making the remittance is required to deduct TCS and deposit it with the government.

Reporting Requirements:

LRS for non-business transactions: India has reporting requirements for outward remittances under the Liberalised Remittance Scheme (LRS). If an Indian resident is sending money abroad for investment in foreign stocks and the amount exceeds the outward remittance limit, they need to report the transaction to the Reserve Bank of India (RBI) through the authorized bank. Failure to report such transactions may result in penalties.

Taxation on Earnings:

If an Indian company has foreign subsidiaries and it repatriates dividends earned by those subsidiaries back to India, the dividends may be subject to taxation in India. The Indian company making the remittance would need to comply with Indian tax laws regarding the taxation of foreign income.

Exchange Rate Gains:

Consider an Indian exporter who receives payment in foreign currency. If there is a favorable exchange rate movement between the time of earning the income and remitting it back to India, the exporter may incur gains. These gains could be subject to taxation in India based on the applicable tax rules for foreign exchange transactions.

How much do Indian banks charge for international money transfers?

The basic bank charges for international money transfers include Service Fees, Currency Conversion Charges, Bank NOSTRO  Fees, and Mode of Transfer. So in total for a 10,000 USD outward remittance service, you may be charged up to Rs 8000 by banks. In the case of fintechs like Karbon, the bank charge for international money transfers in total will come down to Rs 4125. 

Which Indian bank has the lowest foreign transaction fee?

Generally, mandatory fees for 15CA, 15CB, and NOSTRO charges are applicable on all outward remittance transfers. So neobanks are a business's best choice if they seek low foreign transaction fees. 

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